Is a lower monthly payment always the cheaper loan? Often it is not. A longer term can cost far more in total interest, even at a similar rate.
This loan comparison calculator puts two offers side by side for the same amount. Each option gets its own interest rate and term in years. You see both monthly payments, both interest totals, and the difference. It helps home buyers, car shoppers, and anyone weighing two quotes.
Table of Contents
- What the Loan Comparison Calculator Does
- How to Use the Calculator
- The Payment and Interest Formula
- Worked Example: 30-Year vs 15-Year Mortgage
- How to Read Your Results
- When a Lower Rate Costs More
- Limitations and Assumptions
- FAQs About the Loan Comparison Calculator
What the Loan Comparison Calculator Does
The tool runs the same payment math on two loan offers. Results update as you type, with no calculate button.
- Total Interest Savings (Option B vs A): the gap in total interest, tagged "Saved" or "Extra". The label switches to "Extra Interest Cost" when B costs more.
- Option A Monthly Payment and Option B Monthly Payment: principal and interest for each loan.
- Option A Total Interest and Option B Total Interest: all payments minus the loan amount.
- A copy button saves a summary of both offers. A reset button restores the sample loans.
How to Use the Calculator
- Enter the Loan Amount ($). Both options use this same amount.
- Enter Option A: Interest Rate (%) and Option A: Term (Years).
- Enter Option B: Interest Rate (%) and Option B: Term (Years).
- Read the main result to see whether B saves or costs extra interest.
- Click Copy Comparison to save the numbers, or Reset to start over.
Put your current or default choice in Option A. Then the main result tells you what switching to B would do.
The Payment and Interest Formula
Each option uses the standard fixed-rate loan payment formula. The tool then multiplies the payment by the number of months.
- Payment = P x r x (1 + r)^n / ((1 + r)^n - 1)
- P is the loan amount, shared by both options.
- r is the annual rate divided by 100, then by 12.
- n is the term in years times 12.
- Total interest = Payment x n, minus P
- Difference = Option A interest minus Option B interest
Option A Interest-Option B Interest=Saved (if positive) or Extra
At a 0% rate, the payment is simply the amount divided by the months.
Worked Example: 30-Year vs 15-Year Mortgage
Ana and Tom plan to borrow $340,000. Their lender offers 6.875% for 30 years or 6.125% for 15 years. They enter the 30-year loan as Option A.
| Result | Option A (30 yrs) | Option B (15 yrs) |
|---|
| Monthly Payment | $2,234 / Mo | $2,892 / Mo |
| Total Interest | $464,081 | $180,582 |
The main result reads $283,498 Saved. The 15-year loan costs about $660 more each month. In return, it cuts lifetime interest by more than half.
How to Read Your Results
The main figure says "Saved" when Option B has less total interest. It says "Extra" when B costs more. The label above it changes to match, from "Total Interest Savings" to "Extra Interest Cost". If both totals round to the same dollar, it reads "$0 (No Difference)".
The monthly payments show what each loan does to your budget. Check that the higher payment fits before you chase interest savings.
The total interest figures assume you keep each loan to the end, with no extra payments. If you plan to sell or refinance early, the real gap will be smaller.
When a Lower Rate Costs More
Rate alone can fool you. Compare two car loan offers for $28,000.
| Offer | Payment | Total Interest |
|---|
| A: 7.5% for 5 years | $561 / Mo | $5,664 |
| B: 6.9% for 6 years | $476 / Mo | $6,274 |
Offer B has the lower rate and payment, yet the tool shows $610 Extra. The extra year of payments outweighs the rate cut.
Same-term offers are a cleaner test. At 30 years, dropping from 6.875% to 6.5% saves Ana and Tom $30,430.
Rates are not the only cost. Lender fees and points can erase a small rate gap, and the APR calculator with fees captures them. For a full payment schedule on either option, use the mortgage amortization calculator.
Limitations and Assumptions
- Both options must use the same loan amount. You cannot compare different down payments here.
- Fees, points, and closing costs are not included.
- Payments are principal and interest only, with fixed rates and no extra payments.
- The tool does not weigh the value of cash freed by a lower payment.
- Inputs have limits: an amount above $0, rates from 0% to 100%, and terms above 0 up to 50 years. Anything else shows a message and dashes.
To see how extra payments shorten the longer loan, try the extra payment savings calculator.
FAQs About the Loan Comparison Calculator
How Do I Compare Two Loan Offers?
Enter the same amount, then each rate and term. Compare total interest, but confirm the monthly payment fits your budget.
Is a 15-Year Mortgage Better Than a 30-Year?
It saves a lot of interest but needs a higher payment. The 30-year loan gives more monthly flexibility.
Why Does a Lower Rate Sometimes Cost More?
A longer term means more months of interest. That can outweigh a small rate cut.
Does This Calculator Include Fees?
No. It compares rate and term only. Use APR to include fees in a fair comparison.
Can I Compare Personal or Auto Loans?
Yes. Any fixed-rate loan with monthly payments works. For a single unsecured loan, the personal loan payment calculator adds more detail.
How Long Will It Take to Pay Off a Loan Early?
That depends on how much extra you pay. The loan payoff time calculator finds the months left for any payment.
Browse more loan and budget tools on the finance and business calculators hub.
This calculator gives planning estimates only and is not financial advice. Reviewed for general accuracy by Prof. Dr. Khalil Mudassar, PhD.